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The Nordic Model - will it survive?

| Text: Björn Lindahl

At the start of the 1990s, the question was asked whether the Nordic model could survive. Many employers claimed that collective agreements and central bargaining were not flexible enough to provide industry with favourable enough terms. The level of organisation among employees fell. Wage earners, too, advocated many individual solutions. But the model has proved to be more resilient than many believed.

The Nordic model is often depicted as a project developed by the union movement. But you need at least two parties to reach a spirit of unity. However, research has shown it is nearly always the one party that receives the attention.

"It seems to be a law of nature that employers and their organisations are seldom the subject of systematic analysis by social scientists," reports Carsten Strøby Jensen, the Danish editor of a study of employers in the Nordic countries, financed by the Nordic Council of Ministers.

Historically, it was the employers who most advocated the centralisation of bargaining, which at times was opposed by the trade union organisations. But at the start of the 1990s, there was a strategic shift by employers. They started to call for bargaining to be decentralised down to company level. Swedish employers took it furthest. They closed their central bargaining offices and refused to negotiate at any level other than at association level. At the same time, employers resigned from a number of bodies such as the Swedish National Labour Market Board. Instead of being able to influence through representation the employers' organisation became more of a lobbyist’ and opinion-making body.

It's not odd that such a shift took place at the start of the '90s. All the Nordic countries were hit by an economic slump. The most serious crisis was in Finland and Sweden where unemployment rose to almost 18% and just over 8% respectively.

"Not even when mass unemployment hit, were the employers able to stop wages from rising. All the while, the trade unions maintained their capacity for conflict. There's quite a difference compared to the UK, where the level of organisation dropped from 52% in 1980 to 30% in 1999," says Anders Kjellberg, who wrote the chapter on Sweden in the study.

He describes how Swedish employers are now returning to a more central bargaining process. The reason for this was that a lack of co-ordination on the employers’ part meant that certain industries, such as forestry, allowed wages to climb too high. Not only that, but the level of conflict increased.

An important step towards more centralised bargaining is the co-operation agreements reached by industry in 1997. They involved 12 employer organisations, six unions within the Central Confederation of Trade Unions (LO) and, what made it unique, two trade unions which belonged to central organisations other than LO. The Salaried Employees' Association in Sweden, which belongs to TCO (the Confederation of Professional Employees) and SACO (the Confederation of Professional Associations), has a very strong position not just internationally, but also in comparison to other Nordic countries. This has caused LO's share of the total number of trade union members to fall from 78% in 1950 to 54% in 2000. Co-operation agreements meant a shift of power from LO centrally to the new trade union constellation outside LO's control. It also meant that the bargaining the following year in reality became the most coordinated in 25 years in terms of level and length of the agreements.

"I think the chances of the Nordic model surviving are good. In several respects, we are now witnessing a resurgence of what in Sweden used to be called the spirit of unity. In the EU, too, we are witnessing a development partly inspired by the Nordic model," says Mr Kjellberg.

Ari Nieminen, who wrote about Finland, also confirms that the most important elements of the Nordic model will survive the longest. The country's entry into European Monetary Union, EMU, has helped further centralise economic policy and the labour market, since it places strict requirements on the countries taking part.

In Denmark and Norway, employers did not go as far as Sweden in their demands for decentralisation.

"Up until last spring, I would have said that the Nordic model will continue wholly unaltered, but in the summer we experienced a conflict when members said no to the wage agreement negotiated by LO. The result was a considerable rise in costs. Since then, employers have put forward a manifesto for a new policy. The situation is somewhat reminiscent of what happened in Sweden at the start of the '90s, but it's unlikely that the Norwegian employers will ever be as aggressive as their Swedish counterparts were," says Torgeir Aarvaag Stokke, who wrote the chapter on Norway.

When Carsten Strøby Jensen summarises the trends in all the Nordic countries does he ask himself whether everything is still the same as it was?

"The answer is both yes and no. Yes, in the sense that employers do not actually question the existing Nordic agreement models. No, in the sense that employers now play a more active role.

"In the future, it will not just be a matter of how employers react to the demands of the trade union organisations. It will just as equally be a matter of how the trade union organisations react to the demands of the employers," he concludes.

 

 

Facts:
  • The Nordic model represents a partnership between employers, trade unions and the government, whereby these social partners negotiate the terms to regulating the workplace among themselves, rather than the terms being imposed by law.

 

  • Through collective bargaining, agreements are reached which apply industry-wide. Employers accept the trade unions' right to organise workers, while the trade unions accept that the employers have the right to manage and allocate the work.

 

  • The model assumes that both the trade unions and the employer organisations are representative. From an international perspective, the level of organisation among employees is extremely high in the Nordic countries, between 50 and 80 %.This is also the case among employers.

 

  • The Nordic model is supported by the state pursuing an active employment policy. It is based partly on keeping unemployment low and partly on improving the chances of the unemployed of finding a job through the provision of training.
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